AI attracts 99% of capital, as insurtech funding hits four-year high, says Gallagher Re

Global insurtech funding reached $2.44bn in the second quarter of 2026, its highest level for four years, according to Gallagher Re.

The quarterly total was the largest since the second quarter of 2022, according to the reinsurance broker, and was overwhelmingly concentrated in businesses focused on artificial intelligence (AI).

AI-focused companies secured $2.42bn across 95 transactions, accounting for 99.1% of all insurtech funding during the quarter.

Every funding round worth more than $5m went to an AI-focused company.

Gallagher Re said its figures demonstrated the increasing convergence of AI and insurtech, although investment was becoming concentrated among a narrower group of businesses.

Much of the increase was driven by large venture capital and private equity-backed transactions rather than investment from insurers and reinsurers.

Mega-rounds of at least $100m accounted for $1.67bn, or 68.4%, of the quarterly total.

This marked the strongest quarter for large-scale insurtech fundraising since the fourth quarter of 2021.

Overall deal numbers reached 107, the highest since the first quarter of 2024.

However, early-stage funding declined by 51.8% compared with the previous quarter, despite relatively strong transaction volumes.

Insurers and reinsurers participated in 27 technology investments during the period.

Andrew Johnston, global head of insurtech at Gallagher Re, said the scale of funding raised by AI-focused businesses created a potential contradiction.

“Capital availability is clearly not a problem,” he said.

“And yet we are seeing something of a paradox: at a time when AI is supposed to be making things cheaper, individual insurtechs seem to be raising, then burning through, more cash than ever.”

Johnston said the strongest businesses would either help established insurers to adopt AI or use the technology to challenge areas where incumbents had been slow to change.

“The strongest AI-focused insurtechs will either help incumbent insurers and reinsurers deploy AI safely and measurably across insurance workflows, or use AI to attack parts of the insurance value chain that incumbents are too slow to transform,” he said.

Infrastructure opportunity

The report also examined the insurance implications of the rapid expansion in data centre infrastructure supporting the AI economy.

Gallagher Re said global data centre investment was expected to reach trillions of dollars in the coming years, creating some of the largest and most complex assets ever presented to insurers.

Individual AI-optimised facilities could reach tens of billions of dollars in value.

Unlike conventional commercial property risks, data centres create exposures across multiple classes and throughout the project lifecycle.

Potential coverage requirements begin with financing, permitting and environmental liability before construction starts.

They continue through the transport of expensive chips, servers and specialist equipment, followed by construction, commissioning and operational risks.

Once operational, exposures include cyber attacks, service interruption, cooling and power failures and business interruption.

The clustering of facilities also creates significant accumulation risk, while demand is expected to grow for parametric and service-level agreement insurance products.

Gallagher Re said insurers and reinsurers would need engineering-led underwriting approaches capable of assessing the interaction between physical and digital exposures.

Johnston said: “The AI boom is creating one of the largest new pools of insurable assets the industry has seen in decades.

“Every major data centre being built today will require insurance during construction and throughout a multi-decade operational life.”

He added that successful insurers would need to understand how exposures move across traditional business lines.

“The opportunity is enormous, but success will depend on understanding how risks move between traditional classes of business,” Johnston said.

“The winners will be those that can take a holistic view of the entire lifecycle, from transporting the chips and equipment, through construction and commissioning, to live operations supporting some of the most important digital services in the world.”